Awilco Drilling PLC

Investor Presentation • Nov 16, 2017

Q3 2017 PRESENTATION

Oslo, 16th of November 2017

DISCLAIMER

This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated («relevant persons»). Any person who is not a relevant person should not act or rely on these presentations or any of its contents. Information in the following presentations relating to price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Awilco Drilling PLC or any affiliated company thereof. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

This presentation may include certain forward-looking statements, estimates, predictions, influences and projections with respect to anticipated future performance and as to the market for products or services which may reflect various assumptions made by the management of the Company. These assumptions may or may not prove to be correct and no representation is made as to the accuracy of such statements, estimates, projections, predictions and influences. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. The information and opinions contained in this presentation are subject to change without notice and the Company assumes no responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

AGENDA

• 1. Highlights
• 2. Q3 2017 Financial Results
• 3. Operational Update
• 4. Market Outlook
• 5. Summary
• 6. Q&A

1. HIGHLIGHTS

HIGHLIGHTS

• · Announcement of USD 0.20 dividend
• · Total Q3 Revenue USD 32.4 million; EBITDA of USD 20.9 million, net profit of USD 14.2 million
• · Q3 Opex average for WilPhoenix approx. USD 85,800 per day
• · Total contract backlog at end of Q3 2017 was USD 76 million, plus USD 126 million of LOA backlog

2. Q3 2017 FINANCIAL RESULTS

Q3 2017 INCOME STATEMENT

Condensed statement of comprehensive income

in USD thousands, except earnings per share		YTD		YTD
	Q3 2017	30.09.17	Q3 2016	30.09.16
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Contract revenue	32 082	96 878	35 324	59 759
Reimbursables	331	963	356	406
Other revenue	9 32 422	21 97 862	- 35 680	10 60 175
Rig operating expenses	8 089	20 529	8 131	29 435
Reimbursables	92	220	113	113
General and administrative expenses	3 347	6 844	2 149	6 529
Depreciation	3 961	11 723	3 485	11 850
	15 489	39 316	13 878	47 927
Operating profit/(loss)	16 933	58 546	21 802	12 248
Interest income	85	183	143	610
Interest expense	(1 800)	(5 304)	(1 947)	(5 853)
Other financial items	(186)	(191)	(654)	(1 354)
Net financial items	(1 901)	(5 312)	(2 458)	(6 597)
Profit/(loss) before tax	15 032	53 234	19 344	5 651
Tax (expense)/benefit	(809)	(8 140)	(1 481)	459
Net profit/(loss)	14 223	45 094	17 863	6 110
Total comprehensive income/(loss)	14 223	45 094	17 863	6 110
Attributable to shareholders of the parent	14 223	45 094	17 863	6 110
Basic and diluted earnings per share	0,47	1,50	0,59	0,20

Q3 2017 BALANCE SHEET

Condensed statement of financial position

in USD thousands

	30.09.2017	31.12.2016
	(unaudited)	(audited)
Rigs, machinery and equipment	227,700	238,868
Deferred tax asset	726	3,058
	228,426	241,926
Trade and other receivables	6,119	17,269
Prepayments and accrued revenue	13,560	7,213
Inventory	4,809	4,844
Cash and cash equivalents	115,683	70,070
Current tax	227	22,079
	140,398	121,475
Total assets	368,824	363,401
Paid in capital	130,142	130,142
Retained earnings	124,001	96,926
	254,143	227,068
Deferred tax liability	2,821	1,129
Long-term interest-bearing debt	85,000	90,000
	87,821	91,129
Current portion of long-term debt	10,000	10,000
Trade and other creditors	1,398	573
Accruals and provisions	12,211	10,708
Current tax payable	3,251	23,923
	26,860	45,204
Total equity and liabilities	368,824	363,401

3. OPERATIONAL UPDATE

CURRENT FIRM CONTRACT BACKLOG USD 60 MILLION* AND LOA BACKLOG OF USD 126 MILLION

							AWILCO DRILLING PLC
CONTRACT STATUS
		2017	2018
	Nov	Dec	Jan	Feb	March	April	May	June	July	Aug	Sept	Oct	Nov	Dec
WILHUNTER :
Cold Stacked
WILPHOENIX:
Apache	\$382,500							\$116,700**					Through to Q2 2021
		Firm		LOA			Options			Hot/Warm stack				Cold Stack

OPERATIONAL UPDATE

• · Operational uptime in Q3 was 89.1%
• · Downtime on BOP
• · Repair and inspection time resulting in lost revenue
• · Positive customer feedback during the quarter
• · Continued excellent HSE performance
• · Contract negotiations with Alpha Petroleum ongoing

DIVIDEND DISTRIBUTION

• · Announcement of dividend payable of USD 0.20 per share
• · Dividend payable on or around 15 December 2017
• · Shares will trade ex-dividend on 21st of November 2017, the record date will be 22nd of November
• · The Company's dividend policy remains unchanged:

"The Company intends to distribute all free cash flow above a robust cash buffer to support operational working capital requirements and capital expenditure, including SPS."

4. MARKET OUTLOOK

DAYRATES IN THE UK MARKET CONTINUE TO BE VERY LOW

FURTHER SEMI-SUB ATTRITION SEEN IN THE UK AND GLOBALLY

UK FLOATER MARKET
CONTRACT STATUS
			2017 2018										2019
Company	Rig name	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
	Sedco 711
	Sedco 714
Transocean	Sedco 712		on contract
	Paul B. Loyd, Jr			warm stacked										options
	Transocean Leader		on contract																			options
Diamond Offshore	Ocean Guardian		warm stacked				on contract
	Ocean Valiant		on contract				options
	Ocean Patriot	yard			wrm stckd		on contract			on contract
Dolphin Drilling	Blackford Dolphin
Awilco Drilling	WilHunter
	WilPhoenix		on contract					LOA
Stena Drilling	Stena Spey
Paragon Drilling	Paragon MSS1		warm stacked				on contract
North Atlantic Drilling	West Hercules						on contr.
	West Phoenix
Odfjell	Deepsea Aberdeen		on contract
COSL Drilling Europe	COSLPioneer						on contract
ON CONTRACT LOA OPTIONS YARD											HOT/WARM STACKED COLD STACKED

ENCOURAGING SIGNS OF MARKET IMPROVEMENT

• · Seasonal demand expected to prevail into 2019, although some term has also appeared
• · Dayrates continue to be at challenging levels
• · Drilling program interest from Operators of all sizes
• · Decommissioning demand firming up from 2018/2019
• · Continued attrition will help rebalance the market
• · M&A activity has been seen in the market

5. SUMMARY

SUMMARY

• · Announcement of dividend payable of USD 0.20
• · Current firm contract backlog of USD 60 million, USD 126 million of LOA backlog
• · Encouraging signs of market improvement although not yet translated into higher dayrates
• · Evaluating growth opportunities on a case-by-case basis
• · Awilco Drilling's fundamentals are good